Tuesday, March 9, 2010

Upper Deck Safe From Infringement Claim

You know, I’m so b-a-d (oh, uh, that spells “bad” for those not yet awake) about getting new posts up here. (Oh please, it’s not like anyone’s paying me for this stuff, so lay off!) But I’ve been meaning to write about this one for a while, so – although it may be a little stale – here it is anyway.

This is the story of a patent suit. (The patents-in-suit are Numbers 5,803,501 and 6,142,532.) And the story involves entrepreneurs who sought protection for attaching sports memorabilia to baseball cards. Sort of like, buy the card, get the ball – or a shred of the player’s jersey. (What ever happened to buy the cards get the cardboard gum? I loved that stuff. It was filled with mystery – like the meat Jack-in-the-Box puts in its tacos. Anyway, I always liked the gum more than the cards, or the game for that matter, but then that’s me.)

So back our story. You know what they say, Federal Judges are the speed bumps on the road to commercial success. (“They” in that last sentence is “me” as in this blog, but go with it.) Specifically, the Court of Appeals for the Federal Circuit voted earlier this month to affirm summary judgment that Media Technologies Licensing LLC's patents were obvious based on pre-existing cards that featured entertainment memorabilia including, among others, the Fab Four, James Dean and Marilyn Monroe. Given this, the court stated that anyone with skill in the card/memorabilia area could have come up with the idea of attaching sports memorabilia to sports cards.

Easy come, easy go. The original patent-in-suit covered sports trading cards with a piece of that player’s uniform or other noteworthy item attached. (Maybe they should have attached steroid prescriptions and urine samples. Now that would have been interesting. Sports nuts – I just don’t get ‘em.) In any event, the Upper Deck Co. started selling something similar, Media Tech sued, claiming patent infringement. The district court granted summary judgment on the grounds that the patents were obvious, and now the Court of Appeals has agreed.

The net result? Upper Deck makes it home, safe from an infringement claim. Now if only these card makers would try something new, like inserting little strips of cardboard-like chewing gum in with the cards. Now there’s an idea!

Jonathan Pink is an intellectual property and commercial litigation attorney resident in the Irvine (Orange County) and Los Angeles offices of Bryan Cave, LLP. He specializes in handling high states copyright, trademark, patent and business disputes, and can be reached at 949-223-7173 or jonathan.pink@bryancave.com.

Monday, March 1, 2010

Supreme Court Changes Diversity Test

The question of what constitutes “diversity” for purposes of diversity jurisdiction in Federal Court pursuant to under 28 U.S.C. § 1332 has been the topic of some disagreement amongst the Circuit Courts. That’s about to change.

Last week, the U.S. Supreme Court ruled in Hertz Corporation v. Friend that a corporation’s principal place of business is where its “high-level officers direct, control and coordinate the corporation’s activities.” In other words, the location sometimes referred to as the company’s “nerve center.”

28 U.S.C. §1332(c)(1) provides that a corporation is deemed a citizen of any State in which it has been incorporated (that’s the easy one), and anywhere it has its principal place of business. That last provision has given many courts pause, as they try to decipher where a company has its “principal place of business.” For example, the Ninth Circuit, along with the (Fifth, Sixth, Eighth, Tenth and Eleventh) followed a “totality” approach that looked at the location of the corporation’s overall activities, treating the “never center” as only one of several factors.

In Hertz, the District Court used this approach, ruling that Hertz’s principal place of biz was California, notwithstanding the fact that its executives, its headquarters and of course many of its cars were located outside of California. So why the Golden State, the 9th Circuit reasoned that Hertz earned the most money in California, and the majority of its employees were located here.

The Supreme Court took a different approach, chiefly focusing on the meaning and context of §1332’s use of the words “principal” and “place.” First, the Court noted “place” is singular, not plural, meaning that courts should consider if there is a “main, leading or most important” location within a state, not at the company’s activities throughout the state, and then ask whether those activities are “significantly larger” than they are in the next state where the company has a presence. The Court said that the “nerve center” test met the goal of administrative simplicity because it focused on finding the corporation’s “brain,” rather than deciding where the majority of the body parts might lie. The Court explained that it would not be enough for a company to claim that its “headquarters” was the state where it had nothing more than a “mail drop box, a bare office with a computer, or an annual executive retreat.” Rather, the “nerve center” is where “actual direction, control, and coordination” of corporate activities take place.

We’ll have to see how this test works in the Internet age, where the “never center” may be telecommuting from different states.

Jonathan Pink is an intellectual property and commercial litigator. He specializes in trademark, copyright, patent and contract disputes, having litigated such cases in state and federal courts across the nation. He is resident in the Irvine (Orange County) and Los Angeles offices of Bryan Cave, LLP. He can be reached at 949-223-7173 or at jonathan.pink@bryancave.com.